There's a new pop star at Best Buy
Best Buy critics are going to have a field day with the deceptive nature of the ad. Best Buy is selling the starter kit for $99, claiming it is $40 off the regular $139 price. The problem is that everybody sells the same Genesis entry-level kit for $99. Bed Bath & Beyond
Nice try, Best Buy.
Sidestepping the "sale" trick, this is a win-win for both parties.
SodaStream nabs another popular retailer, and this time it's not one that is primarily known for its housewares. SodaStream's been available through Bed Bath & Beyond, Williams Sonoma
This is also a smart move for Best Buy. Stocking up on the syrup concentrate and carbonators that need to be replenished will result in repeat visits after the initial purchase. This is one of the reasons why Bed Bath & Beyond -- which unlike most distributors also swaps out the refillable CO2 canisters -- has become so closely associated with SodaStream's success. Retailers want to feature SodaStream prominently because they know it's more than just a one-time sale.
Best Buy used to be able to woo shoppers with discounted CDs, DVDs, video games, and books for years, but digital distribution of physical media has eaten into those sales. Same-store sales have fallen for four consecutive quarters. SodaStream isn't some magical "cure all" elixir, but at least no one is ever going to digitally download a diet root beer or fizzy energy drink.
I recommended SodaStream to Rule Breakers newsletter subscribers five months ago. There was plenty of skeptical resistance at the time, but the stock has gone on to pop 73% higher since being added to the service's scorecard. The stock hit a new high last week.
Those who figured that this would simply be a 2010 holiday novelty in this country -- despite healthy long-term momentum overseas -- have been proven wrong. Revenue and adjusted earnings climbed 50% and 141%, respectively, in this year's first quarter, fueled by the sale of 592,000 more starter kits and healthy growth in its higher margin consumables.
SodaStream and Best Buy are a good fit -- as long as Best Buy doesn't seriously believe that it can sell these $99 starter systems for $139 come next week.
Is SodaStream a fad or is it a real lifestyle changer? Share your thoughts in the comment box below.
The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of SodaStream International, Best Buy, and Bed Bath & Beyond. One Motley Fool newsletter service formerly recommended Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Longtime Fool contributor Rick Munarriz is a fan of diet soft drinks and has owned a SodaStream maker since last November. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.